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Should I do an asset transfer or a share transfer for the sale of business?Posted: Notice: Undefined property: stdClass::$post_date in /var/www/webapp/ui/mlb_faq.php on line 96

Selling your business can be a complicated procedure. You will always want to have legal representation or legal advice, at the very least, when seeking to buy or sell a business.

There are basically two methods used to transfer a business: through an asset-transfer or through a purchase of the business shares.

In an asset transfer, the purchaser is able to select only those assets that it wishes to purchase as well as only the accompanying liabilities it is willing to assume. Remaining liabilities, particularly unknown liabilities, will, unless expressly assumed, remain the responsibility of the vendor. In contrast, in a share acquisition, the purchaser acquires the corporation itself, along with all of the underlying assets of that corporation together with all of its liabilities, both known and unknown.

Usually, a seller prefers to sell the shares of a corporation to avoid being left with unwanted assets or liabilities, whereas the purchaser will prefer to purchase assets to avoid unwanted assets and unknown liabilities.